Synopsis
The report forecasts an 18% increase in capital outlay for India's top 15 states in FY26, reaching Rs 7.2 lakh crore, driven by post-election spending boosts and infrastructure projects. Revenue receipts are expected to grow steadily, despite challenges in achieving budget targets.Key Takeaways
- Capital outlay to reach Rs 7.2 lakh crore in FY26.
- 18% year-on-year increase projected.
- Continued interest-free capex loans of Rs 1.50 lakh crore.
- Revenue receipts expected to grow by 10-11%.
- Fiscal deficit predicted to remain below 3%.
Mumbai, March 26 (NationPress) The capital outlay for the leading 15 states in the country for FY26 is anticipated to increase by 18 percent year-on-year, reaching Rs 7.2 lakh crore. This rise is attributed to a post-election surge in capital expenditure, the implementation of infrastructure initiatives, and the sustained provision of Rs 1.50 lakh crore to states via interest-free capex loans as outlined in the Union Budget 2025-26, according to a report published on Wednesday.
The analysis by CareEdge Ratings examined the financial statuses of the top 15 states, which collectively contribute 87 percent of India's Gross State Domestic Product (GSDP) for FY24, to offer insights into overall state finances.
The states included are Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal.
A robust growth of 11-12 percent in tax devolution from the Centre and own tax revenue is projected to drive total revenue receipts growth of around 9 percent in FY25, as per the report.
It is forecasted that overall revenue receipts will rise by 10-11 percent year-on-year in FY26, supported by the consistent strong collection of states' own tax revenues and tax devolution from the Centre.
The study of the finances of these 15 states indicated that high performers and outperformers represent 63 percent of the total debt amounting to Rs 86 lakh crore as of March 31, 2024, while moderate performers account for the remaining 37 percent.
Prasanna Krishnana, associate director at CareEdge Ratings, commented, “The financial outlook for India's leading 15 states seems cautiously optimistic. While revenue receipts are poised to increase steadily, these states face challenges in meeting their ambitious budgetary objectives.”
Despite the hurdles, the fiscal deficit is expected to stay below 3 percent for FY26. The escalating debt levels necessitate a measured approach towards borrowing and expenditure, he added.
